The Real Deal New York

Who benefits from a tax cut for the poor? Goldman Sachs

The financial firm is set to benefit from tax breaks through “opportunity funds”

August 29, 2018 06:00PM

(Credit: iStock and Pixabay)

A new tax break meant to benefit low-income areas has opened an opportunity for Goldman Sachs to cash in.

A lesser-known portion of the Republican tax overhaul introduced last year created opportunity funds, which are meant to help 8,700 low-income communities selected by state governors and officials, according to Bloomberg.

Goldman is uniquely positioned to benefit from the tax break, in part because it’s already been funding deals in struggling areas.

The financial firm has reportedly already set up multiple opportunity funds. Recently it created one such fund to invest in projects in Brooklyn and Baltimore. Soon after the tax plan was approved, the bank created another opportunity fund to invest in an affordable housing project in New York’s Jamaica neighborhood and another project to expand a grocery store in a food desert in East Orange, New Jersey.

“We have a big leg up,” Margaret Anadu, the head of Goldman Sachs Urban Investment Group, told the outlet. “This is investing that we’re already doing.”

The opportunity funds also allow firms, including Goldman Sachs, to redirect capital gains, which allows investors to benefit from deferred taxes until 2026, according to the outlet. The move is expected to defer as much as $7.7 billion in taxes by 2022. [Bloomberg]— David Jeans